Crypto Miners Add Load to the Network and Collect Taxpayer Dollars to Just Exist in Texas

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By Jos Medina

Summer was not even a week old when Texas set another demand record on its power grid.

The new record, set on June 27, came amid a brutal heat wave that pushed temperatures dangerously high for much of the month and continued into July. It was the 12th time the record had fallen in about a year (11 records were set in the summer of 2022).

The record has been broken twice since.

As Texans placed demand on the grid for routine things like running their air conditioners, one industry in particular was likely gobbling up huge amounts of electricity to produce nothing.

This industry is crypto mining, which usually means bitcoin.

While crypto miners, or any other industry, cannot be blamed for Texas setting demand records, it was the days they were setting records or when ERCOT issued conservation calls that should make you ask: why? , again, has Texas extended an open invitation to this energy-hungry industry and refused to put in place meaningful controls on its energy consumption?

The amount of energy used by crypto miners will blow your mind.

A few months ago, while a bill to impose controls on crypto miners was pending in the Texas Legislature, the New York Times published an in-depth investigation into the crypto industry in Texas and what it has meant for taxpayers and their energy bills.

Here are some of the findings of the Times from its analysis of public and confidential documents:

According to The Times, the Riot Platforms facility in Rockdale, west of Austin, is the most energy-intensive bitcoin operation in the country. The Times estimates that the facility consumes about the same amount of electricity as the nearest 300,000 homes. A Bitdeer facility neighbors Riot. Both facilities consume as much electricity as all the households within a 40 mile radius. A one-megawatt bitcoin mine guzzles as much energy in a single day as an average house in two years.

All that energy consumption has had an impact on your monthly bill. According to the Times:

Ten large-scale bitcoin mining operations in Texas have increased taxpayers’ electricity bills by 5% per year. The cost to Texas taxpayers of higher Bitcoin mining bills is estimated at $1.8 billion per year. Five large-scale crypto miners participating in the States Demand Response Program have received $60 million. In other words, taxpayers pay miners to remove the request they added to the network. The Uri winter storm in February 2021 was particularly profitable for one company. ERCOT told the Bitdeer facility near Austin to shut down for four days, during which Bitdeer received $18 million in taxpayer dollars.

Crypto miners also received around $170 million from the state for simply signing up for the demand response program, which pays miners more when ERCOT, which runs the state’s power grid, asks them. to close to reduce the pressure on the network. The energy-intensive industry can essentially profit from a situation that it helps to create.

In short, the industry profits from your taxes while increasing the cost of electricity to your home and adding pressure to Texas’ vulnerable grid. And that does not take into account the damage to the climate caused by the use of electricity generated from the combustion of fossil fuels, on which the grid still depends.

Some legislative solutions have been proposed, but state legislators need to do more. That bill mentioned above? This would cap participation in industry demand response and make it ineligible for certain tax breaks. It would also have required miners to register with the state, which would have better managed network load.

The bill, by Republican State Senator Lois Kolkhorst, passed the Senate but went nowhere in the House.

Texas is a growing state where the demand for electricity will continue to increase. Lawmakers can talk about securing the grid by building as many power plants as they want, but it’s a costly years-long process that, depending on the fuel used, will contribute to air pollution and climate change. A faster and cheaper solution is to reduce demand. Lawmakers can start with investments in energy efficiency programs and more scrutiny of crypto miners.

The cheapest megawatt of electricity is the one you don’t use. Crypto miners use lots and lots of megawatts that anyone could use, especially on hot days when supply struggles to keep up with demand.

Energy experts expect more records to fall this summer. When that happens, a crypto miner somewhere in Texas will monopolize all the megawatts or be paid by taxpayers to sit around and do nothing.

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